HMRC has issued a timely reminder to everyone filing Income Tax Self Assessment (ITSA) Tax Returns that the new penalty regime for late filing of returns starts shortly. This includes not only an initial £100 fine but daily charges of £10 for the first 90 days, followed by further charges and interest. One major change is that the penalties will now apply to everyone regardless of whether tax is due.
This tough stance is aimed at reducing the 1.5million returns which are either filed late or are never filed at all. Late and missing returns account for around 13% of total Self Assessment forms and cost in excess of £300,000 in additional Revenue time.
Full details of the new penalties will be sent out with tax forms in April. However, this reminder from HMRC comes at an opportune time, with only a few weeks left to maximise tax planning for the current financial year. One income tax shelter arrangement which is proving popular among higher rate tax payers is that of investing in an Enterprise Zone Syndicate (EZS). By using a combination of direct investment linked to a limited recourse loan 50% tax payers investing in an EZS can end up cash positive to the tune of just under £20,000.
Whilst this seems too good to be true, EZS schemes are government backed tax shelter arrangements which have been assisting higher rate tax payers in their tax planning for the past 30 years. Whilst EZS schemes work out best for 50% tax payers, those paying tax at 40% can still benefit to a lesser extent.
Enterprise Zone Syndicates raise money to fund building and regeneration work in deprived areas of the UK. The most famous regeneration funded by EZS is the Canary Wharf development in London. However, EZS schemes have operated throughout the UK over the past 30 years with current schemes including developments in North Lanarkshire and Newcastle upon Tyne.
Before investing in an Enterprise Zone Syndicate it is important that some time is taken to review an individual’s tax position with a view to maximising tax mitigation. With the interest currently being shown in the available EZS schemes and the short time left to the end of the tax year Newshams recommends that those interested contact us as soon as possible to initiate a review of their tax situation.